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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Jacob Snyder who wrote (56698)	11/30/2001 3:44:37 PM
From: Cary Salsberg	Read Replies (1) \| Respond to of 70976

Jacob, There are cycles and there are cycles. A typical cycle results in overcapacity and undercapacity while semi sales continue their secular trend. Semi unit shipments increase throughout the cycle, but prices and revenue fluctuate with the capacity situation. Semi-equip revenues fluctuate even more dramatically with the capacity situation. A typical cycle may be affected by a recession. It also may be affected by huge bubble burst which results in a worldwide recession, the current situation. The trough of this "cycle" will last at least a year, from the middle of 2001 to the middle of 2002 or further out. The recovery will be very slow and gradual because semi unit sales have a long way to go to get back to bubble levels for which capacity ostensibly was in place. I think you will see $8B, $10B, $12B, $16B, $20B from 03/04-07/08.

To: Jacob Snyder who wrote (56698)	11/30/2001 8:05:30 PM
From: Alastair McIntosh	Respond to of 70976

"Its different this time" Jacob, with regard to cycle lengths you state: The reasons why this pattern exists, have not changed I suggest that the reasons have changed. Most industry cycles have been driven by supply issues. When demand is healthy, falling chip inventories result in additional chip orders which quickly translate into a need for capacity. Orders for new equipment then accelerate causing overcapacity. In this case the cycle isn't driven by supply, but by demand. Falling chip inventories are not producing a sustainable increase in demand. I don't believe the industry has faced such serious capacity issues before. The capital equipment suppliers are bouncing along a bottom in orders and probably will continue at or near this level for several more quarters. This is the reason why this time cycle peaks will be spread out more than normal. As far the extra time between cycle tops, I'm guessing about two years.